[catherineng]

If the recoverability of loan receivable (banking industry) is deteriorating, would it be at high risk for the following assertions?

1) valuation of loan receivable as there is at risk of understatement of bad debt
2) existence of loan receivable as the recorded debtor become go bankrupt and they may not be existed at the year end

Do i have any misinterpretation?

Thanks

[catherineng]

thanks a lot, Mike

[catherineng]

official publisher – ” business assurance”

[catherineng]

Mike,

It is not from past paper. But i was wonder to see it from the other sources of material.

This is the extract from the material:-

“The auditor should consider whether management has recognised any impairment loss in the financial statements for litigation and claims. If not, the auditor should consider whether it is necessary to do so. The auditor should perform audit procedures such as those described in the below.

– obtain details of all impairment losses which have been included in the financial statements and all contingencies that have been disclosed.

– consider the nature of the entity’s business. would you expect to see any other e.g. impairment losses warranties?

– determine for each material impairment loss whether it is probable that a transfer of economic benefits will be required to settle the obligation through the following procedures: considering the likelihood of reimbursement” …….

Thank you

[Author]

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